The Ministry of Mines yesterday awarded the Calub and Hilala natural gas fields and eight exploration blocks found in the Ogaden basin to a Chinese oil and gas company, PetroTrans Company.

Sikinesh Ejigu, minister of Mines and chairman of PetroTrans, Mr. John Chin, signed a petroleum development agreement and four exploration and production sharing agreements at the Sheraton Addis. The petroleum development agreement will enable PetroTrans to develop the natural gas reserves in the Calub and Hilala localities found in the Somali Regional State. The gas fields, which have an estimated reserve of four TCF (trillion cubic feet), are found 1200 km south east of Addis Ababa.

The production sharing agreements will allow PetroTrans to prospect for oil and gas reserve in blacks 3 and 4, 11 and 15,12 and 16, and 17 and 20 in the Ogaden basin. The gas fields as well as all the exploration blocks were previously held by the Malaysian oil and gas giant Petronas. The ministry floated all Petronas’s concessions in Ethiopia except the Gambella block, found in west Ethiopia near the Sudanese border. An independent petroleum expert told The Reporter that all the blocks held by Petronas are promising for oil and gas discovery. “Before selecting the exploration blocks Petronas conducted a thorough study in the Ogaden basin for three years. It interpreted and analysed the seismic data collected from different localities with the help of the latest geo-physics methods. The study enabled Petronas to identify and aquire the best exploration blocks in the Ogaden. So now PetroTrans is taking over the best blocks in addition to the gas fields,” the expert said.

In addition to the Calub and Hilala gasfields, 0.7 TCF of gas was discovered by Petronas in the Genale block. A non-commercial crude oil reserve with one meter thickness was discovered near the Hilala gasfield, 80 km east of Calub.

PetroTrans Company Ltd. Was established in 1997. Founded by Mr. John Chin, it has been mainly involved in the Upstream Oil & Gas Industry, as well as Oil & Gas financing and leasing.

Following the withdrawal of Petronas from Ethiopia, the Ministry of Mines last March invited seven companies to bid for Calub and Hilala gas fields and the eight exploration blocks deemed promising for oil and gas discovery. The total area of the exploration blocks is 93,000 sq.km while the Calub and Hilala gasfileds cover 283 sq.km.

The seven local and international oil companies shortlisted by the ministry bought the bid document and four of them submitted their technical and financial proposals to the ministry. The companies that returned the bid documents were PetroTrans, South West Energy Ltd, an Ethiopian oil and gas company, Cobramar of Seychelles and National Oil Company (NOC), a local petroleum which has a chain of fuel stations across the nation. NOC was established by the Ethiopian-born Saudi billionaire, Sheik Mohammed Hussien Ali Alamoudi.

The ministry said the best proposals were submitted by PetroTrans. According to the ministry, the company will pay the Ethiopian government an upfront payment of USD 130 million and will invest up to four billion dollars on the gas development project. “When you compare the proposals of PetroTrans with the proposals offered by the other companies it is incomparable. PetroTrans’s proposal by far exceeds that of the others,” Sinkenesh said at the signing ceremony. “Our main objective is to quickly develop the natural resource. Our priority concern is the development plan. And what has been presented by PetroTrans is the best development plan.” Siknesh stressed the need to proceed with the gas development and exploration projects according to schedule.

The statement issued by the ministry said PteroTrans will develop the Calub and Hilala gasfileds within three years time by building the necessary gas transport infrastructure and processing facilities. The company will also make appraisal and exploration activities in all its concession. It will drill more wells around Calub and Hilala gasfileds. It will also conduct seismic survey and drill exploration wells in all the exploration blocks.

“The company will do geological and geophysical work, drill appraisal and exploration wells as well as a dedicated export pipeline system. The specific route, size and location of pumping stations and terminal shall be mutually agreed as the route will be decided later,” the ministry said. “The company will pay to the government of Ethiopia USD 130 million for the pre-development costs incurred for Calub and Hilala fields and the Genale gas discovery. It will also invest from USD 2.5 to 4 billion dollars for appraisal, exploration, pipeline construction and Liquefied Natural Gas (LNG) facilities.”

The company will build a gas processing plant which will change the gas into liquid that will be transported by a pipe to the port of Djibouti (Berbera is an option). From the port the LNG will be transported by especial vessels designed to haul LNG. This was exactly what Petronas proposed to do in 2006 with an outlay of USD 1.9 billion investment. Petronas paid the Ethiopian government USD 80 million for the Calub and Hilala gas fields and a USD one million dollars signature bonus for each PSA signed with the ministry.

The exploration period is eight years divided into four years of initial exploration period and two extension periods divided into two years each. The development and production period spans 25 years.

John Chin said that his company is committed to develop the proven gas reserves and discover new oil and gas reserves. “We have discovered oil in Sudan, Chad and Nigeria. We want to do the same here,” he told The Reporter. He said ten years ago his company built a 600-km oil pipeline from Port Sudan to Khartoum in less than ten months. “Two years ago we built 8300 kms of pipeline in China in less than two years. Once we get into a commitment we are very serious and we do it quickly,” He said. The company hopes to finalise the project within 30 months. “A study has to be undertaken to determine where to build the gas treatment plant. We also have to conduct a survey to identify the route of the pipeline,” Chin said.
Chin told disclosed that PetroTrans will subcontract renowned Chinese companies for the exploration work, the construction of the gas treatment plant and the gas pipeline. “We will hire companies that will undertake seismic survey and drill exploration wells,” he said.

PetroTrans has been working with two renowned Chinese oil companies - SinoPec International and CNPC. The gas pipeline construction work will be given to either of the two, a company executive told The Reporter.

PetroTrans will pay to the government 35 percent income tax and a five percent royalty fee. The Ethiopian government will have a five percent stake in the project.

A senior official with the ministry told the Reporter that 5 to 7 million tons of petroleum products including LPG, diesel, kerosene, and gasoil could be produced per annum from the two gasfileds. “The company could discover more gas and even crude oil,”the official said. “If it discovers more reserves it could export the products and also supply them to the Ethiopian Petroleum Enterprise.”

don't get excited too much

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Sinknesh has every reason to be wary of the ambitious gas development project. In the past the Ethiopian government has signed several agreements with different companies which pledged to invest millions of dollars on the gasfeilds. The American company Secor, the Russian companies Methanol Joint Stock and StroyTrans Gas, the Jordanian company SITech International, and Petronas had signed memorandums of understanding and petroleum development agreements to develop the gas fields. Secor, which signed the agreement in 2000, vanished into thin air soon after concluding the agreement with the defunct Calub Gas S.C. Methanol and StroyTrans Gas that signed MoU in 2002 with Calub S.C. and the Ministry of Mines demanded that the government should come up with the fund required to execute the project while they would provide the technology. SITech International, which pledged to invest USD 1.7 billion in 2003, was unable to raise any significant capital. In fact, the company came up with a fake financial report. It was unable to commence work on the project until 2006. Alemayehu Tegenu, former Minister of Mines, revoked the petroleum development license awarded to SIL and decided to tender the project.

The gas fields were first discovered by an American company called Tenneco during the reign of Emperor Haile-Selassie. Tenneco was forced to withdraw after drilling three wells in Calub and one in Hilala because of the 1974 revolution that toppled Emperor Haile-selassie.

The Soviet Petroleum Exploration Expedition (SPEE), which drilled additional wells in Calub and Hilala in the 1980s and early 90's, confirmed the gas reserves. SPEE drilled seven wells in Calub and three in Hilala, 80 km from Calub. In 1998 the Chinese petroleum company, Zhoungyan Petroleum Exploration Bureau (ZPEB), contracted by the Ethiopian government, made eight of the wells in Calub ready for production. ZPEB was paid USD 5.6 million for the well completion work. In 2001, the World Bank suspended the USD 66.3 million loan it agreed to give to the Ethiopian government for a small-scale gas development project in Calub.

“I believe that the time has finally come when we realise this project,” Siknesh told The Reporter. “May God help us,” she concluded. If the gas development project comes to fruition this time, Ethiopia would join the rank of hydrocarbon producing countries.

Currently, there are 8 companies with 12 licenses engaged in oil and gas exploration in Ethiopia. The agreement signed with PetroTrans will increase the number of PSAS to 17.

PetroTrans Company Ltd was awarded concession for 25 years last week, beating six other bidders

John Chine (left), chairman and president of PetroTrans, and Sinkinesh Ejigu, minister of Mines, at the signing ceremony held at the Sheraton Addis on Friday, July 23, 2010.

The Ethiopian government decided last week to award the nation’s promising energy prospects down in the Ogaden Basin to a Hong Kong based company, following the departure of the Carigali Overseas Operation last year.

Petronas’ exit from its explorations bid in the Ogaden and Gambella areas, after spending 350 million Br, remains disputable whether it was prompted due to security concerns, or its management decisions. Nonetheless, the Ministry of Mines (MoM) had issued an international tender in March 2011, inviting prospective developers with a bid to win concessions over Ethiopia’s oldest identified natural gas reserves.

Bearing closer resemblance, a Chinese company, PetroTrans Company Ltd, was awarded the concession last week, beating six other bidders, including South West Energy (SWE), which has blocks in the south eastern part of Ethiopia at the exploitation stage; the National Oil Company (NOC) of Ethiopia, largely owned by Mohammed Ali Al-Amoudi (Sheikh); and Cobramar of Seychelles.

“Out of the three companies [which submitted their bids], PetroTrans has made the best proposal,” read a statement issued by the ministry on Friday, July 22, 2011, after the signing of the concession for 25 years.

Sinkinesh Ejigu, minister of MoM, signed the exploration and production sharing agreement at the Sheraton with John Chine, chairman and president of PetroTrans.

PetroTrans, established in 1997, is involved in an upstream oil and gas industry, and leases oil and gas development projects. The company has experiences with oil and gas development in China, Indonesia, Kazakhstan and Yemen, with portfolios including the 53 billion dollars China-Saudi Arabia gas development agreements, signed in 2003, and the 4.28 billion dollars Petrokazkhstan acquisition venture, in 2005.

The agreement signed at the Sheraton last week adds four blocks, stretching 96,000 square kilometres (sqkm), to the company’s global portfolios.

The concessions transferred to PetroTrans are exploration blocks 3 and 4, 11 and 15, 12 and 16, and 17 and 20, which were under Petronas, a Malaysian oil giant eyeing to invest 1.9 billion dollars.

PetroTrans has agreed to invest close to four billion dollars in order to develop the gas fields of Calub and Hilal, and explore petroleum in the area. The company has agreed to pay a total of 130 million dollars in 10 years for predevelopment costs incurred in the gas fields, which have an initial reserve of gas estimated to reach 76 million cubic metres.

The government has projected this to increase by 100pc by the end of 2014/15, from its 20pc potential now, intending a 20pc annual increase, according to the Growth and Transformation Plan (GTP).

The amount the Chinese company has agreed to pay for the predevelopment is considered the highest amount that has been paid for a concession of blocks, sources at the ministry disclosed. Petronas has paid 80 million Br for the predevelopment of the area.

Before being forced to leave only after drilling a well at Genale and Hilala, Petronas was to invest in building a gas treatment plant and constructing a gas pipeline to the port of Djibouti.

The Chinese company is also to develop the field in three years, building gas transport infrastructure and processing facilities. The pipelines are planned to cross the Ogaden Desert and reach Berbera Port in Somaliland, for exports via ships.

“We believe that there is huge potential that goes beyond satisfying the domestic demand,” said Chine after the signing of the agreement. “The speed at which Chinese companies work is indisputable and shown by the 8,200km pipeline is constructed in just two years. Our company will also accomplish this in a few years.”

As the major work which demands huge investment has already been done by different oil companies which did not make it to the production stage, PetroTrans is in a privileged position to do the rest, an expert well informed on the project and with vast experience in the industry, told Fortune.

“It is only expected to establish a plant with all the machinery necessary for production,” he said.

A number of international companies have carried petroleum exploration and well completion works after the gas fields were first discovered in 1973, by Tenneco, an American company. Subsequent to the change of the Imperial regime in the mid-1970s, and after the end of war between Ethiopia and Somalia, the concession was granted to Soviet Petroleum Exploration Expeditions (SPEE), which had confirmed the gas reserves during the Derge regime.

Following the collapse of the military government, Calub Gas SC, a local company in which the majority of the shares were owned by the government, was established in 1995, with an initial capital of 102 million Br. Managed by the able Jihad Abaqoyas, the company was established to conduct explorations and exploitations of natural extraction in the energy sector; it was dissolved in 2005.

The concessions in Ogaden were granted to a Jordanian company, SITech International, which had made no meaningful progress on the project when its executive disappeared in 2006, despite their promise to invest 1.7 billion dollars.

The federal government commissioned the Chinese Zhoungyan Petroleum Exploration Bureau (ZPEB); it was this company that has made the eight wells in the two sites ready for exploitations.

Ethiopia has come a long way since the 1970s in its dream of producing energy from the Ogaden, with little success to date.

“Today’s agreement will ensure the implementation Ethiopia's vision” said Sinkinesh during the signing of the agreement.

If we think longterm, I guess is a genius move. Imagine south sudan building a pipline through ethiopia to berbera and somaliland being a nation, that will make ethiopia an ultimate superpower in the region. If oil and gas faciliate is already built some where in ethiopia i think that will make south sudan to think seriously about building the pipline through ethiopia because of the closenesss intheir relationship and geopolitical situation. I think the chinessa calcualtion to invest this much is mainly because of that.

I can not wait to see the development in three years though

__________________ I thought freedom was universal but........follow Ethiopian politics it is conceptual!

Southern Sudan (RoSS) is planning to have an oil pipeline through Ethiopia

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The breakaway region of Sudan, which will be known as the Republic of Southern Sudan (RoSS) from July 9, is planning to have an oil pipeline through Ethiopia. The new move is an option to avoid oil sharing agreement with Khartoum. The announcement was made by the South Sudan’s Oil Minister, Dr. Luol Deng in Dubai on Tuesday.

Dr. Deng said that the South Sudan produces 70% of Sudan’s total oil and the sharing agreement, which calls for a 50-50 sharing of oil revenue between the parties, is not fair and cannot be implemented. He added that oil sharing is a highly controversial issue and they holding discussions on this topic since long.

At present, South Sudan’s only source of income is oil, but the administration believes that the country has enough resources to change this. The country has millions of acres of fertile land and plenty of water to work on the land.

The vice-president of the country said that their country has greater wildlife than Kenya and Tanzania, the two countries famous for its wildlife tourism. The country is also looking forward for investment to produce electricity and is and is currently holding discussions with the UAE authorities in this regard.

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Through Ethiopia instead of Kenya? I'm skeptical, what would be the advantage, cheaper to construct? Kenya is connected to the sea, it has to go through at least two countries if they choose the Ethiopian route.

I guess petro-trans smart move to put their move in building a new oil and gas trading route connecting south sudan, ethiopia and somaliland is a serious and more profitable. they r going to expand the berber port and build road, pipe and rail networking connecting ethiopia and somaliland. I guess the next move will be connecting their south sudan interest to ethiopia. I am gonna applaud them for this idea seriously, is a very smart move. cheap labor in ethiopia, cheap port serivce in somaliland and huge resource potential in south sudan, who will walk away from this money making move. Expect a lot of bla bla from western media on this deal mark my word.

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HARGEISA (SomalilandPress)–Somaliland Minister of Foreign Affairs Dr. Mohamed Abdillahi Omar, today gave more details about the trilateral agreement between China, Ethiopia and Somaliland that the government pre-agreed last week in China. The Minister have said, that Somaliland has not any economic power, and he underlined that this agreement was all about the investment of the economic infrastructure including the improvement of port of Berbera and the construction the road that will connect Somaliland and Ethiopia.

SomalilandPress reporter Abdikadir Elmi Kahin (Shiine) was able to ask the Foreign Minster several questions regarding this trilateral agreement that has western countries questioning the merit of the agreement. Dr. Omar held a press conference at the Presidential palace where several other reporters were also able ask questions pertaining to the agreement and the China trip that he went with the President.

Q: Minister, the triangular agreement with Ethiopia and China was about expanding Berbera port, the construction of a rail road system and to refine the oil and gas of Ethiopia in Berbera, please give as further details on how things will happen?

A: We have been in negotiation with the Chinese firm on rebuilding our country’s infrastructure for some time and the expansion of Berbera Port. Our administration’s goal is to make Berbera Port a regional hub for all commercial trades and the agreement that we signed with Petro Trans Company will enable us to reach that goal. We have reach preliminary agreement with the Chinese firm, however the financial and procedural portion of the agreement has not been confirmed and we expect that to be done in the near future. Somaliland does not have the capability to carry out such a massive project and therefore we have decided to cooperate with international firms. Chine as you all are aware of has invested in countries like Ethiopia, Sudan, Southern Sudan and even Kenya. I believe that the investment of China on Somaliland is reliable and could play a big role on the development of the country.

Q: Does your government have any other deals on the table thus far?
A: The President led a delegation to the Gulf regions several months ago and at that trip our government presented the investment opportunities that Somaliland has to offer to the Gulf regions. United Arabs Emirates and Kuwait were two countries that the president and his team presented the investment opportunities in Somaliland and we are still waiting to hear from those countries

Q: Minister, since this agreement is a triangular agreement between Somaliland, Ethiopia and China and Somaliland is not a recognized country, it is said that Ethiopia has taken the responsibility of this project?

A: This agreement will be between Somaliland and the investors of China. Somaliland has independently signed this agreement with the Chinese Firm and we hope that Ethiopia and all our other neighbors will be able to use the services of Berbera Port. Ethiopia is our neighboring country and we have got a mutual bond in the security, education and commercial sector as well.

Q: Will this new agreement of Chinese firm help in the achieving of recognition from China?

A: We are now preparing to build a good relationship with China and that is the introduction, so if we succeed this cooperation and the new relationship, than we will put the plan to send China a representative from Somaliland and that is one of our major issues a Foreign Affairs to do.

Q: Is this agreement between Somaliland and China or Somaliland with investors?

A: In today’s economic world, corporations are the primary contacts in each country therefore this agreement is between Somaliland and Chinese owned firm. So we penned this agreement as an investment corporation.

According to a Presidential press state, the Somaliland delegation met with Chinese investors and Government representatives on Saturday. The statement said a number of topics including economic and trade cooperation, as well as mutual activity were discussed.

China hopes to turn Berbera into strategic trading hub

It added Somaliland, Ethiopia and China are expected to sign trilateral agreements on gas, oil and logistic deals in the days ahead.

Just last month, Hong Kong-based PetroTrans Company Ltd signed a deal with the Ethiopian Government to purchase gas and oil over a 25 year period. The Chinese company will invest close to $4 billion in developing oil and gas reserves in blocks 3 and 4, 11 and 15, 12 and 16, and 17 and 20 in the Ogaden region.

John Chine, chairman and president of PetroTrans, told reporters in Addis Ababa that his company plans to build oil and gas pipelines from the Ogaden basin to the Somaliland sea port of Berbera. He revealed they will also build processing facilities in the town over the next three years.

Today, the Somaliland government re-echoed Mr Chine’s words– finally revealing that China will export oil and gas finds from Berbera. They added as well as building these key infrastructure for gas and oil, the Chinese government has given the green lights to expand the port. They said once completed the port will be able to serve the entire East African region.

Berbera port sits on a strategic location at the mouth of the Red Sea and at the center of Asia, Africa and the Middle East. The Government in Hargeisa might lease it to Hong Kong-based Hutchison Port Holdings (HPH). The Ethiopian Shipping Lines (ESL) might also become one of the main shareholders. ESL announced this week that it has placed an order for nine additional vessels from China at a cost of $293 million. The vessels might be used in Berbera.

The port is expected to become the main port of Somaliland and Ethiopia, a landlocked nation ever since its former territory of Eritrea declared independence. Somaliland believes if Berbera is managed by China, it will exceed its rival neighbor Djibouti once given a full face-lift since 90 percent of goods in Africa are from China.

Road and rail networks that will connect Berbera to Ethiopia and other key infrastructures and networks in the region will be part of the project.

The statement finally said Somaliland, Ethiopia and China will sign the agreements in well organized reception in the Chinese capital. It is not clear if the Ethiopian Prime Minister Meles will sign on the Ethiopian side. He is currently in China as well to attend the opening ceremony of the 26th Summer Universiade in Shenzhen.

“The project, the biggest investment in the country yet, is anticipated to contribute significantly to the country’s social and economic progress,” the statement said.

Experts believe Berbera port will become an important trading hub for Chinese traders in the region. It could provide services as both a transit port for the region and an international transshipment and refueling center.

__________________ I thought freedom was universal but........follow Ethiopian politics it is conceptual!

Southern Sudan (RoSS) is planning to have an oil pipeline through Ethiopia

This is an interesting development because Kenyans have been preparing for quite sometime now to harvest the RoSS oil. For example, there is a plan to construct a new port and a highway from Lamu just to handle that...

__________________"...your behind-the-keyboard insinuations will get good people banned for trivial reasons, please don't start with me..."

Yeah there's been so many promises since the imperial days, I'll believe it when I see it.

petrotrans has paid $4billion already do u think that is out of blue? I guess this time around the wind is blowing in the right direction and I belive this can be done, if someone could shut up ONLF pupit in the west

__________________ I thought freedom was universal but........follow Ethiopian politics it is conceptual!

petrotrans has paid $4billion already do u think that is out of blue? I guess this time around the wind is blowing in the right direction and I belive this can be done, if someone could shut up ONLF pupit in the west

They didn't pay 4 billions dollars for the Oil/Gas concessions in the Ogaden. They said they will most likely invest 2 to 4 billions dollars throughout the projects life. There is no guarantee that this will ever occur. Petronas spent 350 million Br in both the Ogaden and Gambella, not ever close to the ridiculous 4 billion figure you claim. And they(Petronas) only paid 80 million Br for the predevelopment costs,

I don't really care if the oil/gas is a reality, at least a railroad between Hargeisa and Berbera can be built.

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Originally Posted by The Nomadic Warrior

However, we expect to believe that a small Chinese company will take over Petronas and use the port of a non-existent defunct state to export gas from a violate region. Recently, the Somaliland president was arrested in China because he used a Somaliland passport and had to use his UK passport.

No, that was an internet rumor. He was fine.

__________________

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Petro Trans hired two subcontractors for the ogaden oil and gas concession

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PetroTrans hires two subcontractors .

Saturday, 31 March 2012 06:05 By KALEYESUS BEKELE Hits:

Ptero Trans, the Chinese company that took over the Calub and Hilala gasfields in the Ogaden basin hired two Chinese companies - BGP and Sunrise - which will conduct seismic survey and exploration well drilling. Richard Spooner, country manager, told The Reporter that PteroTrans last month hired BGP, which will collect seismic data from Calub, Hilala, Warder and Genale blocks. Hired by Tullow Oil, BGP is undertaking seismic survey in South Omo. Tullow is a British company that discovered oil in Kenya. Tullow also discovered oil in the Albert basin of Uganda. “We have heard many good things about BGP,” Spooner said. “Experts of the company have started analysing petroleum data collected from the Ogaden. The Ministry of Mines has been very cooperative in giving us the access to all types of data.”

Spooner said the old seismic data found at the Ministry of Mines will be interpreted, adding that BGP will collect new data. “Based on the findings of the studies it will be decided where to drill,” Spooner told The Reporter. Representatives of the companies have visited the Ogaden basin in the Somali Regional State.

Spooner said PetroTrans had also hired another Chinese company, Sunrise, that will undertake the well-drilling work. “We will drill additional exploration wells in Calub and Hilala. We will also verify the proven gas reserves in Calub and Hilala.” According to him, Sunrise will start drilling before the end of this year.

However, work on the gas treatment plant is at an early stage. “We have hired companies that would undertake studies on the construction of the gas processing plant. We hired Chapman Engineering and NuTech. The companies specialised on construction and geology,” Spooner said.

Spooner said that the Ogaden region is currently stable and safe. “The Ethiopian defence forces have been helpful.

PetroTrans is interested in constructing an oil pipeline all the way from South Sudan to Djibouti or Kenya. Executives of PteroTrans are holding talks with officials of South Sudan. “It is not appropriate to reveal on-going negotiations,” Spooner said.

They didn't pay 4 billions dollars for the Oil/Gas concessions in the Ogaden. They said they will most likely invest 2 to 4 billions dollars throughout the projects life. There is no guarantee that this will ever occur. Petronas spent 350 million Br in both the Ogaden and Gambella, not ever close to the ridiculous 4 billion figure you claim. And they(Petronas) only paid 80 million Br for the predevelopment costs,

4 Billion

The project is no longer under development, call it terminated. How right was I?